(Bloomberg) -- The fight over who gets to fund J.C. Penney Co.’s bankruptcy is heating up.The U.S. retail giant filed for Chapter 11 protection last month with a $900 million financing package lined up from senior lenders including H/2 Capital Partners LLC and Silver Point Capital LP, according to a presentation at the time. Another set of lenders has lambasted the deal, calling the terms “predatory” in court documents and accusing the other group of strong-arming J.C. Penney.The firms opposing the loan have offered a similarly structured, cheaper financing package that gives Plano, Texas-based J.C. Penney more discretion in bankruptcy, the group said. The group includes hedge fund Aurelius Capital Management, according to a person with knowledge of the plan. A spokesman for Aurelius declined to comment. The retailer’s current loan proposal requires the company go through with an agreed-upon restructuring and gives lenders the ability to veto the plan, according to court papers.“This court and the debtors should not be bullied into yielding to the threats of predatory lending terms that come at the expense of employees, customers, vendors and other creditors,” attorneys for opposing lenders wrote in court papers. The “only answer” as to why J.C. Penney won’t embrace the alternative loan is that the proposed lenders “threatened to use their 75% position in the first lien debt to force the debtors into a liquidation if they don’t get their way,” they write.Commitment FeeThe Wall Street Journal earlier reported Aurelius’s involvement. J.C. Penney entered Chapter 11 protection last month having already paid a $45 million commitment fee on the proposed financing package. The loan is contingent on a plan to, among other things, get approval from senior creditors on a new business plan by July 14 and spin some of its properties into a real estate investment trust.Financing tied to a specific Chapter 11 strategy is increasingly common in corporate bankruptcy. Such deals can help companies cut costs and exit bankruptcy quickly, but concerns have been raised about whether they may trample the rights of smaller creditors or lead to suboptimal deals.A J.C. Penney representative declined to comment. The company has said in previous court filings that its proposed bankruptcy financing was “instrumental” in arriving at its plan for exiting bankruptcy, one it says will save thousands of jobs and maximize recoveries for creditors.Attorneys for the proposed bankruptcy lenders didn’t immediately respond to a message seeking comment on Wednesday.A hearing on the bankruptcy loan is set for June 4.The case is J.C. Penney Company Inc., 20-20182, U.S. Bankruptcy Court for the Southern District of Texas (Corpus Christi)(Adds reference in third paragraph to Aurelius Capital Management as a member of the opposing lender group.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.